The company stands to earn $40 million per month from formerly-free modems.

The cable giant Time Warner faces a class action lawsuit over its decision to begin charging consumers a modem rental fee for equipment already installed on their premises. Early last month, the company began sending out notifications to consumers in the New York area about the $3.95 monthly fee increase.

The New York Daily Newssays a class action lawsuit has been filed in New York and New Jersey. It charges that Time Warner did not comply with its own terms of service, which promise customers 30 days notice before increasing prices.

Under Time Warner's new policy, customers have the option to purchase their own modem if they wish. However, the lawyers behind the lawsuit told the Daily News third-party modems will be unable to support Time Warner's "triple play" packages.

"It’s just a scam to increase revenue," attorney Steven Wittels told the Daily News. The lawsuit says that Time Warner will earn $40 million per month from the fee. It asks the courts to block implementation of the fee.

Modem rental fees are not uncommon in the cable industry. Comcast charges this correspondent $7 per month to use a company-owned modem. He has been too lazy to purchase his own modem in order to avoid said fee.

Modem rental fees are not uncommon in the cable industry. Comcast charges this correspondent $7 per month to use a company-owned modem. He has been too lazy to purchase his own modem in order to avoid said fee.

I own my own cable modem, and have been too lazy so far to pull it out of the closet and call Time Warner to see if it will work. Maybe this weekend.

I got a notice for this last week. I promptly hit Amazon and found a refurbished model for $25. Yeah, I'm annoyed that they want to charge me a rental fee, but I'd rather opt out by getting a good deal like this for a refurbed model rather than the alternative of a service rate increase across the board that I can't opt out of.

Under Time Warner's new policy, customers have the option to purchase their own modem if they wish. However, the lawyers behind the lawsuit told the Daily News third-party modems will be unable to support Time Warner's "triple play" packages.

I am actually fine with the fee. What I am not alright with is being unable to subscribe to the "triple play" packages without having to fork out $48 plus some change every year to do so.

As long as TIme Warner is not allowed to block my access to this package, they should be allowed to implement the fee, I just want an option NOT to pay it.

This is also regional on what you pay. In my region they upped my bill by 4 bucks. But then also lowered the rest of the bill by 4 bucks. I do however end up paying 27 cents more in tax because of it. In my case this is a rare opportunity to lower my bill by 4 bucks a month. So in my region they just unbundled the cost they were charging me anyway.

" Modem rental fees are not uncommon in the cable industry. Comcast charges this correspondent $7 per month to use a company-owned modem. He has been too lazy to purchase his own modem in order to avoid said fee."

" Modem rental fees are not uncommon in the cable industry. Comcast charges this correspondent $7 per month to use a company-owned modem. He has been too lazy to purchase his own modem in order to avoid said fee."

Am I missing something there? What?

The whole thing, perhaps? He could pay $7 less if he bought his own modem instead of using the one Comcast rents him. Seem clear to me.

You aren't "paying for the modem", you're renting it. If you were "paying for it", after a year you would cease to be charged for it, because it would be paid off.

In theory, since the modem is already owned by TW, it should be a depreciating asset and after 3 years or so, written off the books entirely. I've had the same unit for nearly 5 years now, and it's worth roughly the equivalent of scrap paper in the bin next to the laser printers in Corporate Accounts Payable. At $4/month, I would have paid $240 over those 5 years - about $100 more than any of their supported modems sells for at retail.

And now they want start charging me almost $50/year for this hunk of plastic that they've written off their books? That's a cash grab, plain and simple.

If I really want to try to stick it to TW, I'll go into their office every 6 months and ask them to swap out the device. But they'll just recycle the modem & put it in someone else's house.

" Modem rental fees are not uncommon in the cable industry. Comcast charges this correspondent $7 per month to use a company-owned modem. He has been too lazy to purchase his own modem in order to avoid said fee."

I don't understand why everyone doesn't simply switch to any one of a long list of competing service providers who offer a better deal.

Sarcasm duly noted.

There are no competing service providers. In 75% or more of the markets TW serves, your options are TW or the local shitty telco's DSL that costs the same as TW (sometimes more), locks you into a year-long contract, requires that you buy your own equipment, and is slower to boot!

Verizon isn't building out any new FiOS, and even if they were, unless they're already serving as the telco for an area they can't move in with that service.

Satellite? HA!

So what's left? Get 7 figures of funding and start up a neighborhood co-op?

" Modem rental fees are not uncommon in the cable industry. Comcast charges this correspondent $7 per month to use a company-owned modem. He has been too lazy to purchase his own modem in order to avoid said fee."

Am I missing something there? What?

The whole thing, perhaps? He could pay $7 less if he bought his own modem instead of using the one Comcast rents him. Seem clear to me.

Thanks for the snide remarks. I mistook the "this correspondent" with "the correspondent", hence my confusion.

And now they want start charging me almost $50/year for this hunk of plastic that they've written off their books? That's a cash grab, plain and simple.

This, in my opinion, is the point. Time Warner increased their service rate earlier this year (at least, for internet-only customers like myself). Then they started charging this rental fee for a modem that I've had for years.

When all is said and done, I'm now paying ~10% more for the exact same service I had a year ago. Meanwhile Moore's law continues unabated in the rest of the tech industry.

I get a free modem from my cable company (Insight soon-to-be Time Warner) and I've owned my own in the past and I used to work for Charter. I can say I can see both sides of it. On one hand Charter had a hell of a time getting people into modems that worked with their services. A lot of people were using DOCSIS 2.0 (and even DOCSIS 1.1) modems with service level that required DOCSIS 3.0 and then would complain about getting a unstable connection and slow speeds. On the other hand the $7/mo they charged (at the time) would pay for a new DOCSIS 3.0 modem in well less than a year.

The flip side is that recently I had my modem at home go out from a lightening strike. If it were one I owned I'd have been out $150. Instead they replaced it for free. Even though I pay no rental fee that's worth a few dollars extra a month, though YMMV.

When all is said and done, I'm now paying ~10% more for the exact same service I had a year ago. Meanwhile Moore's law continues unabated in the rest of the tech industry.

I wouldn't even be that upset with the extra charge if I started getting an upload speed that was 50% of my download - instead of 10% of my download. It took me 2 months to complete my initial backup to CrashPlan, and after a week long vacation, it took nearly another week to back up the photos I'd taken on that vacation.

My Motorola Surfboard DOCSIS 3.0 cable modem not only lets me avoid the fee from Cox, but because it multi-streams it gets 21 mbps on a 15 mbps account. Sure it cost $75, but it's already paid for itself multiple times over.

I'm a Time Warner subscriber in Los Angeles and I got this notice that they were suddenly going to start charging me $3.95 a month (starting Nov 2012) for a modem that they offered to me for FREE when they induced me to sign up for their service 8 months ago. I am furious and called them - and after being kicked around from one customer service person to another for an hour, the best offer I could get was for them to waive the $3.95 fee for the remainder of my first 12 months of service. Their best defense was to tell me that if I don't wish to pay the new fee, I can buy my own modem. Well, the compatible modem is available in the $70 - $80 RANGE depending on where you SHOP. I reluctantly accepted it because I was just worn out from fighting - but this has not diminished my contempt for TW and their unconscionable money grab. Again - they offered me a "FREE" modem, then 8 months later say, "You know what, that modem is not free after all."

This surprise fee comes not long after TW acquired the exclusive rights to broadcast Lakers games in LA - to which LA sports fans have gone ballistic because not everyone has cable TV, or if they do, they are not TW subscriber's (or subscribers to other cable/satellite providers with which TW has or is working distribution deals with). I doubt it is a coincidence that TW is reportedly (according to the LA Times) seeking $3.95 per subscriber from these other cable/satellite providers for rights to re-broadcast the games.

So, Time Warner (in collusion with the Lakers) screws over all Laker fans by taking the games off regular TV, and compelling them to subscribe to crappy TW service if they wish to watch them - AND then pay an extra "Sports Package" fee on top of the costs of basic cable. Further, TW screws over all their cable and internet-only subscribers (who don't care about the Laker games or don't wish to purchase the Sports Package) and just sticks it to them by charging them a new $3.95 per month modem lease fee. We shouldn't be compelled to subsidize this BS Time Warner/Lakers deal.

You don't have to be a lawyer to conclude that something here is rotten in Denmark. I will gladly join the class action suit when the lawyers start seeking class members in LA.

The flip side is that recently I had my modem at home go out from a lightening strike. If it were one I owned I'd have been out $150. Instead they replaced it for free. Even though I pay no rental fee that's worth a few dollars extra a month, though YMMV.

You must like to buy the really fancy stuff to have a $150 modem. Refurb SB5100 models are available for $20-30 and will get you Docsis 2 speeds just fine. Costco in my area is selling the Docsis 3 SB6121 for $75, and other vendors like Amazon aren't that far off. They don't use too much power so I like to keep mine plugged into my UPS for moderate lightning protection (was more of an issue when I lived in the midwest).

I don't have a problem with a recurring fee...provided they don't block other modems. Now, if they're blocking them because they don't want DOCSIS 2.0 modems, when the triple play requires DOCSIS 3.0...I can actually understand that. Then again, I'm on a Motorola Surfboard I bought myself to avoid the fee. I paid more than the cost of the modem would be to rent for a couple of years, but I prefer this situation.

third-party modems will be unable to support Time Warner's "triple play" packages

Can you explain?

Well there are a few different types of modem, far as cable modems go there are three basic categories, standard (modem with output for just one device and/or router), gateway (modem with router built in) and mta aka telephony modem (modem or gateway with the ability to connect a phone through and handle voip protocols.

While I know Comcast will let you purchase your own mta in most areas just requires a look on their site and a call in to set it up. So I'm assuming that Time Warner doesn't have it as an option.

On a side note the whole modem fee thing was best described as a lease and as part of that lease there is suppose to be coverage for the cost to replace/repair the device if needed. (explained to me that way as a Comcast customer)

Oceanic Time Warner here in Honolulu didn't even do us the service of sending out postcards to say that there was a new fee on the way.

Oh, and as of the tail end of last week, they're not even ready to handle switching modems just yet. I got one of the approved modems (an SB5101U) from Amazon for $50 or so, called them up with its MAC address and was told that they're not in a position to process customer requests to provision a new modem, and there's a helluva queue building up.

My Motorola Surfboard DOCSIS 3.0 cable modem not only lets me avoid the fee from Cox, but because it multi-streams it gets 21 mbps on a 15 mbps account. Sure it cost $75, but it's already paid for itself multiple times over.

I'm on Comcast and after doing the math I bought my own modem as well before moving into this apartment (I moved states for a job in June). For the price I bought the modem vs the rental fee, the worst case scenario is that I break even after a year if I move somewhere with FiOS and can't use my modem any more.

Timothy B. Lee / Timothy covers tech policy for Ars, with a particular focus on patent and copyright law, privacy, free speech, and open government. His writing has appeared in Slate, Reason, Wired, and the New York Times.